Hacker News Reader

I'm not an economist and don't pretend to be...

For thousands of years of our existence, progress was very slow and sometimes we went in reverse in some regions.

Economic growth plus innovation resulted in progress and pulled the 99% who were not wealthy out of utter subsistence poverty over the last few hundred years.

Also, we cannot grow forever (unless we figure out how to colonize other planets). We have to figure out how to live in a worldwide demographic "Japan" zero to negative pop growth, decline and be comfortable and work with it. New generations don't have to be richer than the last. We can achieve some maintainable level of comfort and be okay with that.

Of course the assumption of growth underpins most modern societies, as far as I know, but we will have to find a new model for a new reality.

recent graeber/wengrow research shows your understanding of human progress is way out of date

Care to elaborate?

I think they aim to say that ancients weren't dumb dullards. Which I don't think people are saying they were so. We're saying that to get where we are took as long as it took humanity to get where we are (Outside of some fabulous thinking that there existed "modern" historical societies that disappeared).

When Hobbes said life would be 'solitary, poor, nasty, brutish, and short' he was referring to life outside of the outcast's society.

speaking more to the progress part

I haven't really read it to know the relevance, but I think this is the article: https://www.theatlantic.com/magazine/archive/2021/11/graeber...

The author of that article would not know a steelman if it hit them in the face.

The "conventional account" of human history they describe is one that I personally have never heard espoused and I am not quite sure if anyone really ever believed.

I think I would prefer to read the general source material, I find professional "essayists" often tiresome to read.

“the dawn of everything”, or you can find papers they’ve published

> New generations don't have to be richer than the last. We can achieve some maintainable level of comfort and be okay with that.

I think 1950s USA middle-class was probably comfortable enough, certainly it was far far from "utter subsistence poverty" -- if the entire world population can live at 1950s USA middle-class levels, without destroying the ecology that sustains us, we should count ourselves lucky (it's not clear we can).

Note that was without computers, cell phones. It was much more expensive clothing you'd keep until it wore out. Maybe only one car per family (or less) with more public transportation. Fewer airplane flights. Etc.

Why can’t we have economic growth forever? Economic growth is fueled largely by innovation. What it is the barrier to perpetual innovation?

Will Apple say “Sorry, no more new iPhone versions. All out of ideas?” And all their competitors agree?

> What it is the barrier to perpetual innovation?

Physics and humans shortsightedness.

There are limited resources on Earth and by the looks of it we're stuck here for the long haul.

What about physics prevents perpetual economic growth?

Economic growth isn’t dependent on a certain amount of mass, energy, or entropy.

> Economic growth isn’t dependent on a certain amount of mass, energy, or entropy.

It is though, you might be making the same mass and energy more efficient on a dollar terms, but there is an upper limit and that upper limit is dictated by entropy. There are only so many things that matters on Earth can do under the current physics. We're not that close but not too far away either.

Ok … I’ll bite … how far away are we?

https://en.wikipedia.org/wiki/Kardashev_scale

we have 4 magnitudes to go before our energy consumption match all renewable energy source here on Earth.

I think we can separate innovation from growth.

I think we can agree that we have resource limitations (whether it be livable space or ploughable land).

Modern economies work on the premise of growing markets. Whether creating new markets or taking over old markets. With a steady state or shrinking population, you can value add and you can innovate, but there are no new "China market(s)" to expand into. If growth were not fundamental, then companies would not look to expand beyond their borders (whether local, regional, national or international).

How would companies in modern economies survive if they should predict shrinking markets? Consumerism buys you some time (you need the iPhone umpteenth), at some point a hammer is good enough --with corner-case exceptions.

I don’t agree that there are absolute resource restrictions.

Matter doesn’t become a resource unless it’s economically useful. 5 kilotons of cadmium may or not be a resource depending on your business.

The world is full of ex resources we haven’t exhausted. There’s no shortage of bat guano or saltpeter. Mercury used to be vital, now it’s value is usually negative.

There’s plenty of raw matter that’s useless now that will he extremely valuable in the future. And will eventually have awkward afterlife as an ex-resource. Like bat guano.

I feel like that happened a few years ago but they just kept adding numbers and people kept buying them.

Economic growth is fueled largely by innovation.

That's a curiously unsupported hypothesis.

We can financially grow forever even in a negative population growth, so long that inflation continues and "imaginary" growth counts towards growth. You can add more and more hype to products and let novelty take over "real" price to keep economies bloating, and to keep ahead of competitors as well by circumventing price rigidity. It's a horrible thing that cause wealth concentration because hype is easier to create for resourceful, but the point is, it's reality than possibility.

Retiring off of investment into the economy in return for a piece of the growth is a very happy situation for everyone involved. Companies get access to capital. Retirees get money to live off of. Capital is allocated to those who can make the most value in return.

Retiring off of pensions is a zero sum game. Companies charge more to pay pensioners. Customers don't get any additional value, they just pay higher costs for the same goods and services. Owners get lower returns from the company. Retirees are stuck on fixed income, which is devastating during an inflationary period.

Right but the world is a bigger place than that of capital, customers, investors, and companies. That's the problem. As an example, there are trees, which is a class of thing that doesn't fit into any of those above categories. And even worse it doesn't really work, it just works maybe amortized over time for people who start far enough ahead.

For the government to redistribute real productive capacity and resources to the elderly, they first have to exist. The demographic crisis already means the elderly are going to need quite a bit relative to what we can produce; without growth things would be even tighter.

> Honestly I think this is obvious to anyone who is not financially motivated to think otherwise.

The problem here is that there's no grand conspiracy to pursue growth. People make the individual decision to pursue growth because of the individual benefits.

But the point is that this privileges a small percentage of the population with outsized political sway so the net effect is the same. People acting in their own interests doesn’t make the end result objectively correct or stop us rethinking incentives.

Frankly the only other currently implemented alternative is state funded pensions, which instead of the market rely on an ever expanding population of workers paying their taxes to fund it and is not exactly better.

In countries where population growth levelled off it seems to have recently resulted in raising of the retirement age ever higher. It's basically a state run ponzi scheme. I frankly wish we had a tax free investing account option available instead.

isn’t that a 401k?

I wish they raised the limits.. it’s woefully inadequate after years of inflation.

A 401k is like a state funded pension? No, not at all?

You got the quotes mixed up, the relevant parts are:

>>I frankly wish we had a tax free investing account option available instead.

> isn’t that a 401k?

The IRS raises the limits every year. I imagine they will raise it quite a bit next year.

Yeah we don't get that one nor Roth IRA in most of Europe. Afaik it's only a USA thing (though on second thought I do think pensions are optional in the UK so they may have a similar system).

The main difference between this and a 401k is that the money you pay into it isn't yours and doesn't affect what you get in the end, only your work years fed into some chart determine that. The taxes go directly to current payouts as it would be in a literal ponzi scheme.

Canada has similar in the TFSA and RRSP.

The biggest difference being that typically the state assumes the underperformance risk for a pension, versus the individual for a 401k.

I live in Argentina where the government took over pensioner funds and gave away millions of pensions to people who have never worked in a formal job, and therefore never put a penny into a pension fund. The result is that almost every pensioner earns peanuts regardless of how much they worked or how much they gave to the pension fund, and almost every pensioner earns half the poverty line basket.

Guaranteeing financial security to anyone is impossible.

> Guaranteeing financial security to anyone is impossible.

Plenty of countries have done just fine. What you described is horrible mismanagement and not the only way to do things.

The typical counter-argument to complaints about the impossibility of endless growth is that growth/gdp are usually sufficiently vaguely defined that it is possible to go on forever – there isn’t any fundamental relationship between growth and resource use.

I don’t really understand your last paragraph; it feels to me like it is written from a very American perspective. There seem to exist countries that achieve economic growth while having sane healthcare, childcare, etc, and it feels clear to me that U.S. issues are more related to the current local optimum the political system has come to rest in than to some obsession with growth. So what is the argument here about growth? Is it that the other countries don’t actually have growth or that they don’t actually provide stability on social issues or what?

> governments/employers not wanting to guarantee financial security of elders and offload the risk to the individual

One can argue for a well-fare state that provides all guarantees one wants.

But you're flipping the issue here. First, you have a risk of not aging. But most people are inevitably going to age and retire. This risk is inherent to the individual. Now we can offload that risk to the government (please, it's not the other way around), but it's going to have costs. And I think offloading it to the government is even riskier, because governments make stupid decisions and are subject to massive corruption.

> And there's almost nothing to do about it- that's the way things currently "work" and it seems insurmountable to do anything about it.

A small handful of the super-rich have already pointed out the only thing "we" can do about it: revolution. Inequality that continues for too long leads to overthrow. The rich get eaten, the poor become a rabble, monarchy/autocracy/totalitarianism eventually returns, and the cycle starts over. That's where we're headed. The funny thing is, our social ills might be the cause before our economic ones are.

> This system of course is built 100% on governments/employers not wanting to guarantee financial security of elders and offload the risk to the individual.

The growth obsession phenomenon also happens in countries which demonstrably put more effort into caring about the elderly and the poor. They still get left behind, albeit at marginally lower rates than in a country like the US.

It's the juiced economic statistics and obsession paper growth that's the core problem, not necessarily "rich people have influence"

I would absolutely love it if dividend yield stocks made a big comeback.

> The biggest problem is the rich have created a system in which people's future (retirement) is basically linked to "the market" growing over their lifetime.

Not really, half retired Americans live off Social Security alone, and another big chunk I'm guessing a quarter rely on it. Many others have property, business or keep working. I'm guessing its about 10-20% of Americans really have enough 401k savings to live off.

I don't know much about details of the USA Social Security model, however from what I recall doesn't it effectively require continued economic growth to plausibly be able to pay out what it should without significantly raising the starting age to decrease the number of years it pays out?

There is definitely a problem with people living longer and bulge of baby boomers. There are alternatives to fund this such as raising taxes or debt, but yes likely people will have to work longer if they keep living longer.

You can have endless growth as long as productivity is increasing faster than population loss. Increasing productivity needs technological advancement. Alternatively we can stem the tide of population loss by having humans live longer, or by waiting for the current generation of non-breeders to die off allowing the breeders’ children to reproduce. Likely they are more genetically predisposed to reproduction.

I don't think it's obvious. Growth and innovation go hand and hand. A tug of war between capitalism and socialism is essential for a healthy society that can solve exciting problems via markets. It's not perfect, but the growth model keeps society agile, with many options via startups and market competition. It gives us the toolbelt to solve complex problems quickly. It's challenging to start up industries and maintain the plumbing to combat world problems when we have non-innovative, non-incentivized markets. It's apparent that I'm rattling off some generalizations.

False Dilemma fallacy: capitalism vs socialism

I don't know any socialists that want to completely disassemble capitalism. I do know several capitalists that want to completely disassemble socialism, or at least greviously wound it at any opportunity.

I didn't say VS, I said a tug of war. Meaning they pull at each other, and play with each other well. Growth and government stability via policy, keeping each other in balance. Too much socialism leads to a central authority with too much power, too much capitalism leads to monopolies with too much power. And yes there is more than capitalism and socialism. But the author was OP was focused on growth and socialist policies.

The system is totally unsustainable... unless we're willing to have a society of debtors, noone is going to buy homes from the boomers.

The majority of retirement the average middle class has is their home.

I’m not sure what you mean when you refer to “the system” but the extradorinaiy price increases in homes were caused by boomers printing an unprecedented amount of money for themselves and lowering interest rates.

If history repeats itself, real estate valuations should revert to a long term mean which would make homes somewhat more affordable. There are some early indications that this is happening.

The problem is when a civilization stops providing ways for its inhabitants to keep winning inside of it, the civilization collapses. In Western civilization, if there is no growth, how will you motivate people to keep working? The only thing left is to steal from the people who already have things.

We have two options; intentionally iterate away from this society or it will collapse for SOME reason; bigotry, environment catastrophe…

Physical laws do not give a fuck about our philosophy. Accept figurative death, cowards.

Steal from people who intentionally changed the rules to deflate our wealth. The laws and their interpretation are no accident.

What this debate is is deference to the elderly or the youth.

Tacit ageism against the future or well reasoned action against the past.

Gramps; you had a good run. Bye.

Edit: I have an MSc in elastic structures, used to work in high powered switching equipment. I understand rates of change in high energy systems like a planets climate. This is not an emotional argument from a place of ignorance.

Many if not most philosophies and religions arise precisely to answer this very question. It's possible to live happily and healthily without growth.

People will always work because work needs to be done. Food, shelter, power, all of it requires active work by people. No stealing necessary. The laissez-faire rhetoric of "no growth, nobody to work" is exactly the problem mindset this economist is trying to address.

You don't need growth in zero-sum areas or areas that would make us face environmental collapse for people to want to survive and see their needs met.

Perishable goods still exist. People will still work to create perishable goods to consume. They will still change cultures and create solutions in areas where the game is not (pseudo-)zero-sum.

You also can't grow everything forever, as real estate is showing. If your concern is people stealing, that's an obvious target.

"Honestly I think this is obvious to anyone who is not financially motivated to think otherwise." which implies that the interviewer and the economist are acting in good faith and are not financially motivated to push certain ideas.

"The biggest problem is the rich have created a system in which people's future (retirement) is basically linked to "the market" growing over their lifetime." ah so trade and supply/demand that are moved by "standard persons" = rich people, ah yes.

"This system of course is built 100% on governments/employers not wanting to guarantee financial security of elders and offload the risk to the individual." great idea, have people at governments mercy and build a voter block that is going to put the tick where they're going to be told to for some of that extra pension plan dough.

"...the rich benefit insanely more by market movements than a standard person does..." while also contributing the most tax revenue...

What are you smoking? The rich pay capital gains which is way, way less than the average person is paying.

"The latest government data show that in 2018, the top 1% of income earners—those who earned more than $540,000—earned 21% of all U.S. income while paying 40% of all federal income taxes. The top 10% earned 48% of the income and paid 71% of federal income taxes." https://www.heritage.org/taxes/commentary/1-chart-how-much-t...

Nice of you to imply that only "the rich" can buy/sell assets, especially in a post-Gamestop world.

Now, add VAT to income taxes, and change the referential. Top 1% gives back X% of their income as taxes, top10% gives back Y%. If Y>X, you have inequality issues.

"Inequality" in percentage but not the actual revenue. Not sure what is the point of adding VAT though. "The rich" does not pay it i presume, just like "average people" are free of capital gains taxes (lmao).